What legislative changes are needed to attract investors to the mining sector in Ukraine

At the initiative of the National Association of the Mining Industry of Ukraine (NAMIU), an online roundtable discussion titled “Mineral Resource Use Without Ties” was held. The topic was how state support for the mining and processing industries should function and what needs to be refined in draft laws No. 13414 and No. 13415 before their second reading in the Verkhovna Rada. GMK Center presents the key points of the speech by Musa Magomedov, Member of the Ukrainian Parliament and Chair of the Subcommittee on Industrial Policy of the Verkhovna Rada Committee on Economic Development.

Focus on the mining sector

Two important draft laws are currently under consideration in the Verkhovna Rada; they were adopted in principle in early November of last year and are now being prepared for the second reading.

• Draft Law of Ukraine “On Amendments to Paragraph 4 of Section XXI ‘Final and Transitional Provisions’ of the Customs Code of Ukraine Regarding Investment Compensation Through Taxes” (Registration No. 13414 dated June 25, 2025);
• Draft Law of Ukraine “On Amendments to Section XX ‘Transitional Provisions’ of the Tax Code of Ukraine Regarding Investment Compensation Through Taxes” (Registration No. 13415 dated June 25, 2025).

The industry’s primary and fundamental position is that tax incentives should apply not only to the processing industry in the narrow sense, but also to mining projects—provided they are integrated into the mineral processing and enrichment chain. Today, the draft laws effectively leave mining companies—which are the initial and most capital-intensive link in this chain—out of the picture.

Amendments to these two draft laws at this stage are, in essence, the first systematic attempt to introduce real investment incentives for the extractive industry. Key tools include income tax exemptions for up to 10 years, import benefits for equipment (duty and VAT exemptions), and the possibility of reduced land tax rates at the local level.

Support for extractive projects is not a privilege for individual players, but rather the fulfillment of Ukraine’s international obligations within the framework of the strategic partnership with the EU (EU–Ukraine Raw Materials Partnership) and the Memorandum with the United States on strategic minerals.

In accordance with the EU Regulation on Critical Raw Materials (Critical Raw Materials Act, 2024), the extraction and primary processing of minerals are recognized as equal elements of a single value chain. The relevant amendments to the draft laws have already been registered with the Verkhovna Rada.

Three years is not enough for a major project

The second systemic problem concerns the timelines for implementing investment projects. The current version sets a single deadline: no more than three years. This may be realistic for small and medium-sized businesses. But for large industrial projects, it is not.

Here is a specific example: the construction of a large plant in Hungary, costing about €200 million, took six years. And this was in a peaceful country with a well-established permitting system. In Ukraine, given the war conditions, the complexity of approvals, and equipment installation, the actual implementation cycle for a capital-intensive project is at least five years. A three-year limit under such conditions is not an incentive but a barrier.

The proposal we submitted to the Verkhovna Rada Committee on Economic Development, which has already been registered as an amendment, is to differentiate the timeframes based on the investment amount: up to three years for projects under €20 million, and up to five years for projects over €20 million. This aligns with international practice and the actual specifics of the industry.

The €50 Million “ceiling” barrier

Another problem that cannot be ignored: the bill sets an upper limit of €50 million on the cost of investment projects in the processing industry (the inclusion of the extractive industry in the list is currently under consideration). That may seem like a lot. But only until you face reality.

The cost of a single walking excavator—the basic equipment for open-pit mining—is about €55 million. In other words, even a single necessary unit already exceeds the limit, making the project “ineligible” for incentives.

This issue is particularly relevant in the context of the minerals agreement and the interest of American and European partners in Ukraine’s extractive sector. Attracting strategic foreign investors with a €50 million cap is unrealistic. Therefore, we propose removing this upper limit: incentives should be available for projects of any scale—provided all other requirements are met.

Additional incentives and legal precision

In addition to structural issues, the technical “fine-tuning” of the bill is also important. In particular, the list of equipment exempt from customs duties under Bill No. 13414 needs to be expanded—based on actual imports and the real needs of heavy industry enterprises. In particular, industrial engines and power units, furnaces and kilns, bearings, transformers, electrical equipment and cable products, and various measuring instruments should be added to the list. These are not technical trifles—they are the equipment without which manufacturing projects simply cannot be implemented.

It is also important to clarify the wording regarding sanctions restrictions: the draft law refers to the ultimate beneficial owners of legal entities, not to their participants or shareholders in general. A broad interpretation of this provision could artificially exclude systemically important enterprises with transparent operations, where indirect minority stakes are possible without any real influence on management. The criterion should be control and influence, not merely formal presence within the corporate structure.

It is worth noting separately the proposal to lower the threshold for revenue from core activities from 90% to 80% as a condition for receiving corporate income tax benefits. This aligns with EU practice (Poland, the Czech Republic, and Hungary apply a 70–80% threshold) and takes into account the actual revenue structure of companies providing ancillary logistics and service activities within a single production process.

Finally, it is proposed to remove entirely the rule that a single taxpayer may implement only one investment project. This artificial restriction has no parallel in international practice. Large industrial groups can and have the right to develop several projects simultaneously—the criterion should be each project’s compliance with established requirements, not their number.

What’s next

These proposals have already been registered as amendments to the draft laws. Overall, draft laws No. 13414 and No. 13415 represent an important step forward. However, for them to truly take effect and have a tangible impact on the economy, these proposals must be taken into account. The industry is not asking for privileges—it is asking for conditions under which investment makes sense.

Following the roundtable, participants have one week to submit their proposals and join the industry’s consolidated appeal to the Verkhovna Rada. As chair of the Subcommittee on Industrial Policy, I confirm: all registered amendments will be considered as part of the preparation for the second reading. The task is not simply to pass the law, but to pass it in such a way that it truly launches the investment process in strategic sectors.

Ukraine has a unique mineral and raw materials base. The question is whether we will be able to create the conditions for its development—or whether we will once again waste time while other countries attract investors whom we failed to convince.